The role of the GDP deflator: This index is also used to calculate components of GDP, such as personal consumption expenditures. This index can more accurately reflect the general price level trend and is the most macroscopic measurement of the price level.

Economists mostly use real GDP to illustrate various economic issues when conducting economic analysis. The GDP deflator can more accurately reflect the general price level trend and is the most macroscopic measurement of the price level.

The role of CPI: a macroeconomic indicator that can reflect changes in the price levels of consumer goods and services purchased by households.

It is a relative number that measures the changes in the price level of a group of representative consumer goods and services over time within a specific period of time. It is used to reflect the changes in the price level of household purchases of consumer goods and services. situation, which can reflect the coefficient of change in the retail prices of goods and services within a month.

The relationship between GDP deflator and CPI:

The calculation basis of GDP deflator is broader than CPI, involving all goods and services, including consumption, production means and Capital, export goods and services, etc. It is worth pointing out that these two indexes generally move in the same direction at the same time.

The average GDP deflator is 1.8 times CPI. Generally, during the rising stage of CPI, the GDP deflator is already relatively high. When the CPI reaches a high point, the increase in the GDP deflator will slow down. This is related to the fact that raw material prices first rise and then are transmitted to the CPI.

Extended information:

The difference between GDP deflator and CPI:

1. GDP deflator reflects the price of all domestically produced goods and services , and CPI reflects the price of all goods and services purchased by consumers. For example, the price of an explosion-proof vehicle produced in China and bought to the military has increased, and the price in the GDP deflator has increased. However, because it does not belong to the goods and services purchased by ordinary consumers, the CPI has not increased.

The GDP deflator only includes domestically produced products. Imports are not part of GDP and are not reflected in the GDP deflator. But imported goods affect CPI.

2. In terms of weighting. CPI is a relatively fixed basket of goods and services. The Bureau of Statistics only occasionally changes the composition of this basket of goods. In contrast, the GDP deflator is the price of goods and services produced within a limited period and the price of the same goods and services over several years. In contrast, the combination of goods and services changes automatically over time.

3. GDP deflator = nominal GDP/real GDP. It is used to reflect changes in the overall price level in the economy. The CPI measures the price of products and services purchased by consumers, and it measures a fixed basket of consumer goods.

Reference materials:

Baidu Encyclopedia-Consumer Price Index

Baidu Encyclopedia-GDP Deflator